Technology Transfer Seminar (JST Hall, Ichigaya, 23rd March 2005) "Technology Transfer at the University of Cambridge"

David Probert

Centre for Technology Management

Thank you, Professor Saito. And good afternoon, ladies and gentlemen. Thanks also to JST and JAREC for inviting me here today. It’s my pleasure to come and share with you and learn from your experience and also hopefully pass on a little bit of something what we’ve been doing in Cambridge, as we’re on, I think, a journey together to explore the possibilities of technology transfer from the university. I should say I work here in the Center for Technology Management, which is a research center in the engineering department, and we’re very closely involved with the activities of technology transfer, but also the activities of absorption of technology within industries and collaborating companies. And I’ll speak a little bit more about that also tomorrow.

I think we’ve already said technology transfer, what is it? Largely about knowledge and very much involving people. So, I would like to explore this afternoon briefly a little bit about the UK context for technology transfer, what’s been happening historically in the UK, then something about particularly Cambridge experience, Cambridge’s perhaps a slightly different environment because of its history and location; but within that context, then, the current work of Cambridge enterprise. This is, as I said, an evolving picture, and Cambridge Enterprise is now the organization charged with technology transfer, fostering of entrepreneurship and the realization of some of the economic benefits that could come from technology developed within the university. And the existence of that organization is literally only a few weeks or months old, and it’s been transforming and changing over the last ten years, to my certain knowledge. So, I’ll talk a little bit about the mission activities, results and future plans and then a little bit at the end about an alternative perspective, which is very much focused on what the people’s involvement in this is.

So, initially, then, the UK context. And the purpose of the university—I think we touched on this in an earlier presentation this morning—traditionally, the purpose of the university has been teaching. And Cambridge, as we’ll see in a moment, was started some 800 years ago, and for the first 700 years of its life teaching was the mission; the provision of learning and skills for students and production of graduates with relevant skills for society. Research, as a curiosity-led blue sky’s activity, trying very cutting edge, leading edge ideas, testing hypotheses, that really only goes back about 100 years, at the University of Cambridge anyway. And now, more recently, this what we call the third mission, or the third stream of funding, is perhaps only 10 years old in Cambridge. So you can see that in the context of the university it’s a very new activity and we’re still learning how to do that effectively, but it is now a mission charged by the government of all universities to make efforts in this direction.

The recent history in the UK goes back, I suppose, primarily to 1997 with the Patents Act, which gave the results of invention, property was available to the employer and should be exploited by the employer. And interestingly, Cambridge, as an institution, didn’t choose to implement that, and Cambridge academics have had, until very recently, great freedom to exploit or not their own inventions and the universities certainly didn’t put a lot of effort into exploiting them on their behalf.

Another landmark was the end of the monopoly of the BTG group, of whom we heard earlier, who had a monopoly until 1986 on intellectual property arising from research at universities, and that was a change initiated in the Thatcher era. It was felt that BTG at that time weren’t making the best use of the intellectual property that was arising from research.

But, although that change was made, it didn’t occasion a particular growth in university activity in technology transfer, and that was promoted a little later with the government white paper called "Realizing our Potential," which really identified the university’s key role in exploiting intellectual property and identifying that there was a revenue stream there. But again, the activity very often lags the policy and the 1908 education white paper pointed out the need for real funding; it wasn’t sufficient to say universities should do this; the government had a job to provide some funding to enable those activities to be set up. And from 1908 onwards, there have been substantial public funds available for universities to develop technology transfer activities.

And then, finally, although this is an evolving story, I think one of the more recent reviews, the Lambert Review, which was published at the end of 2003, actually, but effectively came out early 2004, was a very wide-scale review of the collaboration between government, universities and industry in the UK, pointing out the huge potential that there was if effective collaboration could be achieved, and again pointed out the need for more support; in other words, some of that has since followed. And in fact, one of the final outputs of the Lambert process has been, just within the last few weeks, publication of model agreements that industry and academia can use on which to base their collaboration, because drawling those out has often been a stumbling block for people who haven’t been involved before. So, those model agreements are actually available on the Web; if you go into Google and search for Lambert, you’ll find that. So, that’s the recent history.

In terms of government statements in the UK, as you’d expect, there have been several policy declarations to support this. Going back to ’99, when I found saying that enterprise and entrepreneurial new business are the engines of growth in a modern economy, and I think this is something that’s widely recognized in all modern economies now. But the first point of substance, I suppose, was Lord Sainsbury, who is—some of you may know the Sainsbury grocery chain in the UK; he is part of that family and until recently ran the business and he stepped aside to enter government and became, I think, probably our most effective Minister of Science that we’ve had in my memory, and he’s worked over the years long before he was in this position with us in Cambridge, but he’s been very effective in influencing government opinion and even public opinion to the importance of science and engineering and securing funding for it. So, he has, in this statement in 2001, indicated money to be spent to incentivize knowledge transfer alongside research and teaching.

And then finally, the statement from the Lambert Review, which says that concerted action will be required to grasp the opportunities. So, many statements, but you always have to ask: What’s the real money that’s available? Well, if we take just as summary here, the responsibility has been given to the universities; some initial funding was made available to realize that; for example, science and device(?) challenge and university challenge funds; this was money that universities could put up to fund ideas and help start spin-off business. But more recently—and this is very recent—the statement at the end that was that we have a permanent stream of funding. This was announced by the Office of Science and Technology just two weeks ago of f300 million, and that’s over a period now of about two or three years. What’s permanent in politics, you ask, but that’s probably about as permanent as you get because it looks forward within the lifetime of this government and the next. But I think it’s a serious statement now that there will be continuity of funding for these activities from the government in the UK.

So, turning now to particular situation in Cambridge and how that has evolved, for those of you not familiar with the geography of the UK, here we are in London, the red spot in the lower-right corner. Cambridge is in the eastern corner of the UK, traditionally an agricultural area, not particularly an industrialized area, actually quite a poor area economically in the UK for many years, of fenlands which were marshes really and badly drained until the Romans arrived. That helped the civilizing process, and the Dutch helped it even further in the 1600s by further draining the Fens and now it’s actually quite a habitable area, or it will be until reclaimed by the sea as a result of global warming, I think, probably in the next 50 years.

Around Cambridge is what’s grown up to be a high-tech business cluster. And that’s an area very hard to define, but probably about 30 kilometers radius around Cambridge you find now a growth of new business that’s technology-based, which is referred to as the Cambridge high-tech business cluster. And that’s a picture of the landscape. Traditionally, as I say, a lot of waterways, agricultural land, not very industrially exploited. And this is the view of the university, and as the impression gives a lot of old buildings, the university was founded 800 years ago. And many of the buildings are several hundred years old. Of course there are new developments, but when you visit the town, your impression is one of medieval architecture.

These, though, are some of the modern faces of Cambridge, and these are just an example of some of the high-tech activities in and around Cambridge. And there’s a little split here. The companies up here, I would describe as home-grown companies; these are spinouts, companies, that have developed in Cambridge often based on Cambridge technology or from people out of the university. Autonomy you may know of as the search engine, Plastic Logic; this is semiconductor polymers; ARM(?) is the ... instruction set microprocessor business, which was found in just about every mobile device.

But then, there’s also a lot of inward investments at Cambridge, so you’ll see large companies here who have set up research labs in or close to the university to take advantage of synergies with university people, maybe having joint appointments; their head of the lab, but may also be somebody from the university; and being close to the university, they make use of the people, the human capital within the area.

And then, finally—and I think a very important group that’s often overlooked—the technology consultancies who operate in and around Cambridge, and there are several of those. Cambridge consultants, PA(?) technology, the scientific generics group, the TTP group. We have many interactions with them in terms of: they recruit our students; we may set up projects with them for our students; and we collaborate with them on activities of research and development. But they are independent financial organizations, making a living out of technology development and technology transfer internationally, but finding Cambridge a good location because of the infrastructure and particularly the human capital that’s in the location.

This is the growth of the activity over the last 40-odd years. And you’ll see that the high-tech businesses which—it depends how you measure them, but they number anywhere between about 1,500 or 1,600 and 3,000, but on this particular measure, we’re estimating around 1,600 high-tech companies in that area now. The growth, as you see, is very much in the last 10 or 20 years.

The university itself is not large by international standards. We have some 16,500 students, 20 percent of them now coming from overseas, but all activities represented in the faculties and departments, and the most recent figure for research income I can find is about 254 million. And that’s up to date.

In terms of the previous year, just to give you an idea of the financial scale of the university, the total budget is about 500 million, and that research income there is an earlier figure, so the one I just showed you has grown. But the funding is coming from the government, but also from companies for the research income.

In terms of history, because Cambridge has been there a long time, clearly, a lot of work has been done historically, and many of the famous names of the past in terms of scientific discovery originated in Cambridge. Some of the more recent ones are maybe less known, but they’re in the area of conducting polymers and monoclonal antibodies and so on. But there’s a rich heritage within Cambridge of scientific discovery and, also to some to extent, exploitation.

However, the role of the university within that business cluster—and this touches now directly on technology transfer—is changing. Up until 10 years ago, it really was very undirected and probably under-resourced. It was enthusiastic; it was ad hoc, but it wasn’t systematic or structured. And the change in recent years has to make this a much more directly organized and focused activity. And this now takes the shape of Cambridge Enterprise, which, if you go again into the Web of the University of Cambridge, you can find more about the current structure of Cambridge Enterprise.

But in terms of technology transfer, for us that covers all these activities. And although within this kind of discussion we tend to concentrate on licensing spin-outs, the top three, particularly the exchange of people and the movement of graduates out into industry, is very important, and that’s a big part of the Cambridge phenomenon because of the employment in the area, but also the intermediate activities, if you like, the consultancy, the education, the student projects which for us are a very large part of activity; the teaching company schemes and liaison with companies and university are important. And embedded labs, I already mentioned some of the companies that have set up research labs.

This now, then, is the scope of Cambridge Enterprise activities, and you’ll see that there’s an Entrepreneurship Center to promote entrepreneurial behavior and educate; there’s the Technology Transfer Office responsible for licensing and transfer of technology. There are two activities to help fund emerging and startup businesses, the Challenge Fund and the Capital Fund, and there’s what has existed for some time, Cambridge University Technical Services, which is the company within the university through which people can render consulting services. But that’s a free choice; they don’t have to, but it’s there as a vehicle for them to use. And the total number of people: about 24 full-time equivalent, FTE, staff of that group now.

So, this is the mission. It exists to help University of Cambridge inventors, innovators and entrepreneurs; to make their ideas and concepts more commercially successful for the benefit of society, I think, is an important point, but also the UK economy, the inventors and the university.

So, what do they do in terms of carrying out that mission? Well, they are the things that I think probably we’re all doing in terms of encouraging commercialization of knowledge; so, licensing, business creation, both spinouts and startups, investments, consultancy. We have our own incubator now. We’ve had an incubator in Cambridge for some time, the St. John’s Innovation Center, which was part linked to the university in the sense that it was on college grounds within a facility supported by St. John’s College, but now there is one that’s based within the William Gate’s building, the computer lab in Cambridge, and that’s part of Cambridge Enterprise, but also teaching, training and external relations.

In terms of IP and licensing, there’s the management of the university IP portfolio, a very close working relationship with inventors, and we’ll probably come back for this later, but this is a key part of realizing the potential of technological development, I think, the close working between the people in the Cambridge Enterprise office and the originators of the ideas. And that’s done through a case method with a case manager, but then a team drawn from Cambridge Enterprise who support the case manager working with the inventor to commercialize and recommend the best route for commercialization, taking into account very much the preferences of the inventor him- or herself. Then, whatever means to protect the intellectual property and seeking further commercial and license opportunities.

In terms of company creation, there’s a range of support for developing business ventures, helping to write plans, getting a new venture to the stage where it’s ready for investment, and also this new incubation space, the Cambridge Enterprise lab. And, as I’ve mentioned, the funding available from the university challenge fund, the venture fund, and the introduction now to venture capitalists, which there are several in the Cambridge area, but, of course, many national and international venture capitalists who are interested to invest in some of the ideas coming out of university research labs. And again, Cambridge Enterprise is going to assist in brokering that discussion.

This is a model of the case process for company creation—and I think probably no surprise, but it does have some serious review points in it. The first assessment is: Does it really have anything to do with Cambridge University? And is it in any way high-tech? And it has to pass both of those tests to engage the interest of Cambridge Enterprise. And following some further assessment, there’s a fairly serious point around Gate 2(?) where it’s decided: "Well, we’re not pursuing this any further," and the kindest thing is to tell the inventor that at that point. Or, if it’s a marginal case, then possibly it could be indicated where else the people might go or the individual might go to get help. But if it’s decided that this is an invention with potential, then the full case support team from Cambridge Enterprise will be applied to that business development, which then takes the following form—various stages of validation, preparation, launch and growth—and the inventor can expect the involvement of the case manager and the case team throughout that process.

In terms of investment, the amounts of money are not huge, but there is funding available to support university ventures, and the Cambridge Enterprise will help with the preparation of that investment case to the University Ventures Board, which is an independent panel. And you can see that the Challenge Fund is small amounts of money for early ideas; the Venture Capital Fund is really early-stage validation money, probably not enough really to get a business off the ground, but at least to provide proof of concept and attract external investment. And so far, in the existence of these views, there’s been about 39 investments in 28 companies.

Consultancy activities. These are, again, I think, conducted in a fairly unusual way at Cambridge, in my experience anyway. These are important part of bringing academics into contact with the external world and provide an opportunity to additional income as well as validate the ideas that they have. And here again, Cambridge Enterprise can help with the preparation of agreements and negotiations and provide professional liability insurance as well, if that academic is working under the university name. Within Cambridge there’s no limits to how much time an academic might spend carrying out consulting. As long as he delivers on his research and his teaching and his administrative responsibilities, the university doesn’t set an amount of time that can be given to that. It’s based on trust, and I think it’s fairly fragile and voluntary arrangement that only continues as long as it’s not abused. And the individual always has the opportunity to work privately and not through Cambridge Enterprise, should they so wish.

In terms of teaching and training, there’s a collaboration with the Center for Entrepreneurial Learning, which is based within the business school within(?) our Institute for Management Studies, and they deliver all the education in terms of entrepreneurial activity, but in collaboration with Cambridge Enterprise. And the Cambridge Enterprise group itself is involved very much with assistance in delivery and running the business plan competition, which is an activity directed mainly at students at Cambridge with a f50,000 prize for the best business plan.

In terms of external relations, Cambridge Enterprise is very much working with the Corporate Liaison Office of the university to show off the technologies that have come out of the university and make those accessible to companies. One of the biggest challenges I’ve observed for large and small external businesses—but it’s the large businesses that tend to show most interest—is how to find their way into the university to find appropriate technology. And that very much can be facilitated by the Corporate Liaison Office and Cambridge Enterprise working together. But they also run the sponsorship program; we have Cambridge Enterprise Conference, and an activity which has grown out of Cambridge-MIT collaboration, which is a gala dinner, to celebrate some of the more outstanding technological achievements and where, for example, the Cambridge business plan, the entrepreneurship plan competition, the prize would be awarded. That’s a celebratory event.

In terms of recent outputs, to put some figures to that, this is the last financial year for the university, but I think you can read the numbers for yourself. This is still an emerging field, I would suggest, for Cambridge, but these figures all show growth over previous years, and perhaps most significant thing at the end of 2004 was the first IPO from Cambridge; it’s been out, the Cambridge Display Technology, that’s the light-emitting polymer business.

So, in terms of collaboration with industry, very wide range of activities, we have business mentors who are actually volunteers working with Cambridge Enterprise to help the new ventures, giving their time, many of them drawn from the local community; also business people helping with teaching, coming in working on teaching courses for our students and others. They’ve raised money for sponsorship, but this is particular funding for collaborative research, the 20 million that Cambridge Enterprise have raised; company internships; technology showcasing events; and, as I’ve said already, the Enterprise Conference, which is an annual event and growing.

So, in terms of where’s the organization going, it has fairly ambitious goals, which is, looking over the next five years, to double the extent of licensing activity and revenue, although I think it’s arguable whether this is—Don’t forget, the activities of any organization such as Cambridge Enterprise are subsidized, and to what extent one could expect them to be entirely self-sufficient and return money to university is yet to be determined, I think, but there’s a lot of government money going into support that. Increase the number of spinouts from the university and the growth rate of spinouts, which is in a particular area of interest for us in research, how do the spinouts survive? What’s their growth path? What challenges to survival do they meet on the way? To double the number of academics commercializing their inventions and ideas and also to increase the level of interaction with business on all levels. And, as you see, the bottom line is: Break even financially and return surplus, ideally, to the university. And that depends, of course, a lot on what happens in terms of their success in both the spinouts and the licensing.

Just finally, a little bit on the alternative; we’ve been talking a lot about the licensing and spinout and perhaps intermediate activities, but we’re, in the Institute for Manufacturing where I’m based, very much involved with the people transfer and we’re generating the gene pool of industry, if you like, keeping the ideas flowing. And it’s through that interaction that we get a lot of our stimulus both for teaching and for research ideas. So, our students moving out into industry, then perhaps coming back to work with us, which happens in research projects or in technology transfer projects, is a very stimulating part of the whole picture. And within the Institute for Manufacturing, our particular aim is to work with industry, manufacturers in particular, to help them grow and be more competitive and also to create wealth more effectively. And in doing that, we’re doing these three things in effect: the education, which is our degree courses and manufacturing engineering course in our case; our research and particularly our research in the Center for Technology Management is all about providing tools and techniques that enable managers in technology-based industry to make more effective use of technology—and I’ll be saying more about that in the next couple of days.

Finally, the practice, this is really where the technology transfer occurs for us. We’re running seminars; we’re running evening education courses, workshops and symposia to bring people from industry into the university, into contact with our research teams and to prompt that exchange of knowledge and ideas, which for us is the source of very often the next direction of research, let alone the commercializing of the current research.

So, in conclusion, I’d just like to say that we’re increasingly of the view that knowledge transfer, and technology transfer perhaps in particular, and the commercialization of these activities is very important for the university in the context of a national campaign and government funding to support that.

Within Cambridge it’s, as I’ve said, a young activity in the context of the development of the university, and so the structures, the processes and resources are in a process of change and improvement. And we’ve learned a lot, as you are doing now, by looking outside to models in the U.S. We’ve looked in Japan; we’ve looked in Asia; looked anywhere for ideas as to how these things might be done better. And I think that joining in a discussion such as this, and we’re watching with great interest the experience now in Japan as you try new ways as well to do this better, I think the exchange of those ideas between people trying new things is actually a very important mechanism for knowledge transfer within our own activity.

So, finally, I’ll just leave you with some websites which are useful to fill in a little detail on the background of what I’ve been speaking. Particularly here, you can go and read the Lambert Review, which is a 140-page report on how government, industry and academia might work better together. This is a government website which explains the funding that’s just been released. This is a report on how—this has come out from our research center recently, looking at the evidence for university spin-off companies and what economic benefits they bring. Our own website’s at the top. And there’s also a website which is "Enterprize.Cam," which is the Cambridge Enterprise website where you can read more about the organization of Cambridge Enterprise. And now, that’s it. Thank you.

.【Ｑ】 At the Cambridge University you have Cambridge Enterprise and Center for Technology Management. And you have a number of organizations supporting technology transfer. And my question is, what is the division of labor between these organizations and what is the sort of liaison and coordination between these? Are there any problems for having not single but multiple such organizations? Would there be competition between them? Even within a department? You wanted to use certain consultants for the transfer of certain technology, but other organization had gone ahead and found a consultant. Those things happen?

【Dr. Probert】 Excellent question. Yes. There’s a very high degree of healthy competition between the different parts of the university who is striving for the same goal. I’m speaking here from a research center within engineering, very close to Cambridge Enterprise. I have colleagues in Cambridge Enterprise. One of my teams has previously worked in Cambridge Enterprise. Somebody from Cambridge Enterprise is coming to work with us soon. They’re in the next building. There’s a lot of contact.

Cambridge Enterprise is the organization charged to do this with the whole of the Cambridge University, and even within their own organization there are developments and tensions within different parts of the organization, as it’s been reorganized over the last five years and most recently within the last few months. You’ll find, then, parts of the university doing their own commercialization, comparatively independently, if they feel capable of it. But increasingly, as this becomes an effective organization, this is the natural place to go for that kind of help. And Cambridge is a very democratic organization and it’s very difficult to mandate change, as we’ve found in recent years. But if a good example can be shown, then people will make use of it. And my observation is that this organization is increasingly effective and that for most inventors, most academics, it’s now a big advantage to be able to work with Cambridge Enterprise.

Within our own organization—we’re a research center linked to this activity, but we’re also within the Institute for Manufacturing carrying out a lot of people technology transfer, which doesn’t bring us into competition with the activities of Cambridge Enterprise because it’s about people involvement; it’s about our students going out to industry and industry coming to collaborate with us on research projects. And when we set up a research project together, we would very much do that with the assistance of Cambridge Enterprise in terms of the Technology Transfer Office.

So, it’s a picture that’s changing and which is evolving and organic, but on top of that, the university establishes an organization. And when it’s effective, it works very well.

I have some question. You have 1,600 small companies or ventures in Cambridge area. I’d like to know increase in number of employees.

【Dr. Probert】 Yes. That’s also an interesting question. I don’t have the chart with me, but you’ll find that, by and large, the average size of those companies is quite small. And that’s one of the challenges that the Cambridge area is dealing with or facing up to now. Traditionally, what has happened is, particularly where these companies have come out of the university, they may grow to be 5, 10, 15 people, and then they may be acquired by another international company that sees them as a source of very valuable intellectual property. And they don’t necessarily grow to be large employers in their own right in the Cambridge area.

Now, whether you regard that as a success or a problem is just from which perspective you want to take. It’s a success in the sense that it’s a Cambridge spinout; it takes ideas and technology out to the marketplace. In terms of the UK economy, it might be better if they grew bigger in the local area before they were acquired by a larger international company.

【Professor Saito】 I have more questions. Okay? I found the name of Richard Friend in your key people’s list. He’s now CEO of Cambridge Display Technology sponsored by Cambridge Enterprise?

【Dr. Probert】 That’s right, yes.

【Professor Saito】 He is a physicist. And he gathered organic chemists in his group. Very successful. I think there remains many technological problem to commercialization.

【Dr. Probert】 Oh, yes.

【Professor Saito】 He became CEO of Cambridge Display Technology.

【Dr. Probert】 Yes. This is talking of Richard Friend, here, who is a professor of physics at the Cavendish laboratory in Cambridge. And if we go back to the companies, he’s involved in both CDT, Cambridge Display Technology, and Plastic Logic, because the technology underpinning both of these companies is semi-conducting polymers. And in this case, the polymers are being used as light emitters for display screens, and this is the company that was recently floated on the stock market, and Plastic Logic is being used for integrated circuits for maybe being to print electronic circuits. And Richard Friend is a good example of an academic who is retaining his academic roots and conducting research, but also involved in these commercial activities; he’s on the board of both companies, actively involved with the venture capitalists who are supporting.

【Professor Saito】 Very competitive area.

【Dr. Probert】 Very competitive. Many competing technologies, yes.

【Professor Saito】 My third question is, I was impressed that during the next five years, Cambridge Enterprise aims to, I think... Is this the commitment of the company?

【Dr. Probert】 Well, I think the nature of their activity, the activity of Cambridge Enterprise is that if they don’t meet?those are self-imposed targets; that’s what the organization would like to achieve. I think the university isn’t going to exert any sanction if that’s not achieved, but might look at further reorganization, I’d expect. I think it’s the organization of the unities evolving picture.

【Professor Saito】 Anyhow to achieve.

【Dr. Probert】 Yes. Ambitious goal. But I think the recent history indicates they’re on the right track.

【Ｑ】 Thank you very much, Dr. Probert. Covering the history and recent evolution there, I appreciated your presentation. For the success of Cambridge Enterprise, who are the customers? And how simple and how clearly are they identified? Who are the customers? Maybe that has much to do with the success of that. Do you have any comments there if you can elaborate, please.

【Dr. Probert】 Yes, certainly, thank you. I think primarily that the customer is seen as the academic community within Cambridge, in terms of serving them and enabling them to generate results from their research. And if that community isn’t looked after, then the organization won’t function well. So, primarily, they have to address the needs of the academic community and make sure that the academic community feels they’re working effectively for them. Then they’ll use them and then the synergies work well. But of course, very closely behind that comes the industrial community worldwide, who are the targets for the technology transfer. And finding the appropriate route to exploitation and appropriate end-user is a very key part of the activity.

And then in the middle, I guess, is the UK society, the taxpayer, who has funded a lot of this activity, who could expect to see a return. But I think primarily, if you need to say, "Who do we need to satisfy in sequence?" it would be that sequence; the academic community so that they make use of it, see benefits, then the end-user community, the companies that would use the technology and finally pay back to the taxpayer and UK society.